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Should you buy these 3 popular travel shares?

One area of the share market which has been booming of late is the travel and tourism industry.

This has led to strong gains being seen across the industry over the last 12 months. Is it too late to buy these star stocks?

Corporate Travel Management Ltd (ASX: CTD)

The shares of this leading corporate travel manager have risen a sizeable 18% over the last 12 months. Investors appear to have been very impressed with the company’s half year result which revealed a 33% increase in underlying net profit on the prior corresponding period to $36.4 million. This gain has left its shares changing hands at approximately 31x estimated forward earnings. While this is a premium to the market average, I believe the company can deliver strong enough long-term earnings growth to justify this thanks to its opportunities in a highly fragmented global corporate travel market.

Flight Centre Travel Group Ltd (ASX: FLT)

This travel agent’s shares have climbed an astonishing 79% since this time last year. Improving conditions in the travel booking industry and a surprisingly strong half-year result have been the catalysts for this push higher. This strong run now means that Flight Centre’s shares are trading at 21x estimated forward earnings. I think this is about fair value for them considering Flight Centre’s current growth profile.

Webjet Limited (ASX: WEB)

While Webjet’s shares have rallied strongly so far in 2018, they are mostly flat over the last 12 months. Concerns over its account practices and its Thomas Cook Travel arrangement have largely been to blame for the mixed share price performance. But with things now settling, I think investors ought to consider an investment in the online travel agent. Especially after it reiterated its earnings guidance this week for full year EBITDA of more than $80 million, up from $62.5 million in FY 2017. I think this level of growth makes Webjet very attractive at 27x estimated forward earnings.

Finally, are these shares the next Webjet? I think they have huge growth potential.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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